Xbox and Microsoft are ‘too big to care’ says FTC chair who predicted price hike

The former FTC chair has pointed out she was right all along, in her attempt to block Microsoft’s acquisition of Activision Blizzard and following the recent Xbox Game Pass price hike.

Microsoft’s announcement of a 50% price increase for Xbox Game Pass Ultimate has gone down about as well as you’d expect, but along with being bad news for gamers everywhere, it’s highlighted some of the company’s previous… factual inexactitudes.

In 2022, the Federal Trade Commission (FTC), led by Lina Khan, sued Microsoft over its acquisition of Activision Blizzard, to stop it from going through, arguing that further market consolidation would harm consumers. However, the judge ruled in favoured of Microsoft.

During a separate court case with the UK Competition and Markets Authority, who also opposed the deal, Microsoft said the merger would not lead to an increase in Xbox Game Pass prices. Since the acquisition went through in October 2023, however, Microsoft has raised the price twice: in July last year, and last week for Ultimate subscribers.

Following the latest price hike, Khan, who resigned as FTC chairman earlier this year, has now criticised Microsoft’s actions on X, describing the company as ‘too big to care’ after the merger.

In response to a post which highlights Microsoft’s denial of a price increase at the time, Khan wrote: ‘Microsoft’s acquisition of Activision has been followed by significant price hikes and layoffs, harming both gamers and developers.

‘As we’ve seen across sectors, increasing market consolidation and increasing prices often go hand-in-hand. As dominant firms become too-big-to-care, they can make things worse for their customers without having to worry about the consequences.’

One of the main draws of the Activision Blizzard acquisition was ownership over Call Of Duty, but it seems like Microsoft’s attempts to use the shooter as a way to drive Xbox Game Pass subscriber growth has not worked so far. (One of the other main draws was meant to be Call Of Duty on Switch, which has also not happened yet.)

According to a Bloomberg report, which cites interviews with seven current and former Xbox employees under anonymity, the Xbox Game Pass price hike is further evidence that the company’s ‘streaming push is still not generating the revenue it would like eight years after launch’.

The company’s decision to put many best-selling titles on Xbox Game Pass, like Call Of Duty, has apparently (and unsurprisingly) cut into the title’s overall sales. According to one source, Xbox gave up more than $300 million (£222 million) in Call Of Duty sales on console and PCs last year, by putting it on the service.

Joost Van Dreunen, founder of video game analytics firm Aldora, told the outlet: ‘Game Pass hasn’t delivered the explosive growth Microsoft anticipated post-Activision, and they’ve realised their infrastructure costs don’t align with their pricing model.’

Last week’s sharp price hike for Ultimate subscribers is a clear indicator Xbox’s subscription model isn’t growing fast enough. However, Microsoft might be hoping to entice more players through Xbox Cloud Gaming.

According to The Verge, Microsoft is preparing to announce a free ad-supported version of Xbox Cloud Gaming, which will allow people to stream certain titles without a Game Pass subscription.

Along with the ability to stream games you own, it’s claimed the ad-supported tier will encompass Free Play Days titles and Xbox Retro Classics. Microsoft is apparently testing a time limit of one hour for sessions, with up to five hours free a month, although it’s said these could change when the service arrives in the coming months.

It’s difficult to see how this will move the needle in any significant way, but it might indicate Microsoft’s plans for the next generation will go big on cloud streaming in some fashion.

Xbox has changed how earning points on Game Pass works

In the short term though, Microsoft has tough hill to climb, in earning back trust with players. If the price hike wasn’t bad enough, the company recently confirmed Xbox Game Pass Ultimate subscribers are no longer entitled to a 10% discount across add-on content.

‘This is not specific to any one game and reflects all games and DLC purchases,’ a Microsoft spokesperson told Eurogamer.

While there’s no discounts at first, Microsoft highlighted how, under the revamped rewards scheme, subscribers will earn points when purchasing games and add-ons which they can use against gift cards. However, the amount of points you can earn each year depends on your subscription, with the essential tier capped at 25,000 and Ultimate at 100,000.

It might be a small change in the grand scheme, but it’s still another dent in Microsoft’s armour, at a time when the next generation looks more crucial than ever.

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